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The Elasticity of Trade: Estimates and Evidence / Ina Simonovska, Michael E. Waugh.
- Format:
- Book
- Author/Creator:
- Simonovska, Ina.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w16796.
- NBER working paper series no. w16796
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- The Elasticity of Trade
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2011.
- Summary:
- Quantitative results from a large class of structural gravity models of international trade depend critically on the elasticity of trade with respect to trade frictions. We develop a new simulated method of moments estimator to estimate this elasticity from disaggregate price and trade-flow data and we use it within Eaton and Kortum's (2002) Ricardian model. We apply our estimator to disaggregate price and trade-flow data for 123 countries in the year 2004. Our method yields a trade elasticity of roughly four, nearly fifty percent lower than Eaton and Kortum's (2002) approach. This difference doubles the welfare gains from international trade.
- Notes:
- Print version record
- February 2011.
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